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25 Tul. J. Tech. & Intell. Prop. 213 (2023)
Looking for FRAND: Patent Owners, Standard-Setting Organizations, and the Courts

handle is hein.journals/tuljtip25 and id is 221 raw text is: Looking for FRAND: Patent Owners, Standard-Setting Organizations, and the Courts Stanley M. Besen* Standard setting organizations (SSOs) have adopted policies that ostensibly limit the ability of owners of standard-essential patents (SEPs) to charge royalties in excess offair; reasonable, and non-discriminatory (FRAND) levels. These policies typically require patent owners that participate in the activities of SSOs to disclose which of their patented technologies might read on a standard that is being developed and, once the standard is established, to commit to charging FRAND royalties when their patents are declared to be standard-essential. The purpose ofsuch requirements is to increase the appeal of an SSO's standards to implementers and consumers by limiting the costs and prices of standardized products. As I show in this Article, however; owners of patented technologies that are either included in standards or candidates for inclusion have resisted efforts by SSOs to limit the royalties that they charge for the use of their SEPs, adopt a consistent method for calculating the value of a FRAND royalty, or even articulate a precise definition of the meaning of FRAND. Constraints on the royalties that SEP owners may charge may also have been undermined by several recent court decisions. These developments increase the likelihood that potential licensors and licensees willform differing expectations of the royalties that should be paid by makers of products that adhere to industry standards and that owners of standard-essential patents will be able to extract excessive royalties from product makers when the latter develop and sell standardized products. The possibility of such outcomes may discourage product makers from investing in the development of products that are compliant with industry standards, thus defeating SSOs'goals of maximizing the acceptance of their standards and consumers' interests in being able to choose from as wide a variety of competing standardized products as possible. For these reasons, it has become increasingly important for SSOs to make meaningful the FRAND commitments that are made by patent owners that participate in their activities. As currently structured, however; many SSOs are unsuited to this responsibility. This is because patent holders can exercise significant control over SSO policies. I. INTRODUCTION .............................................................................. 214 II. STANDARD-SETTING ORGANIZATIONS DO NOT EFFECTIVELY LIMIT SEP ROYALTIES .................................................................. 224 A. The 3rd Generation Partnership Project............................ 227 B. European Telecommunications Standards Institute ............ 228 C. VMEbus International Trade Association ........................... 230 * © 2023 Stanley M. Besen. Senior Consultant, Charles River Associates, 1201 F Street, NW., Washington, D.C. 20004; email: sbesen@crai.com. The views expressed in this Article are solely those of the author and do not purport to represent those of Charles River Associates, CRA International, Inc., or any of their other officers, employees, or affiliates. 213

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